COMMONWEALTH OF MASSACHUSETTS APPELLATE TAX BOARD VIRGINIA T. KUYKENDALL v. BOARD OF ASSESSORS OF THE TOWN OF FALMOUTH Docket No. F266736 Promulgated: June 15, 2005 This is an appeal under the formal procedure pursuant to G.L. c. 59, 64 and 65 from the refusal of the appellee to abate taxes on certain real estate in the Town of Falmouth assessed under G.L. c. 59, 11 and 38 for fiscal year 2003. Commissioner Egan heard this appeal. Commissioners Scharaffa, Gorton, and Rose joined her in the decision for the appellee. These findings of fact and report are made pursuant to a request by the appellant under G.L. c. 58A, 13 and 831 CMR 1.32. Virginia T. Kuykendall, pro se, for the appellant. James Jursac, Assistant Assessor, for the appellee. FINDINGS OF FACT AND REPORT ATB 2005-336
On January 1, 2002, the appellant was the assessed owner of a parcel of real estate located at 40 Drift Road in the Town of Falmouth ( subject property or subject or property ). The subject property is composed of an approximately 1.60-acre ocean-front lot improved with a modest one-story camp. For fiscal year 2003, the Falmouth Board of Assessors ( assessors ) valued the subject at $494,800 and assessed a tax thereon, at the rate of $7.96 per thousand, in the amount of $3,938.61. A land bank assessment in the amount of $118.16 brought the total tax bill to $4,056.77. The appellant paid the tax without incurring interest. On October 30, 2002, the appellant timely filed her application for abatement with the assessors, which they denied on November 25, 2002. On February 24, 2003, the appellant seasonably filed her appeal with the Appellate Tax Board ( Board ). On the basis of these facts, the Board found that it had jurisdiction over this appeal. The subject property is situated in the Black Beach area of West Falmouth. The lot consists of approximately 6,500 square feet of upland with an elevation estimated at eight feet, along with approximately 0.47 acres of dune and 0.98 acres of marsh land. The property is located on a narrow barrier beach, which protects the Sipperrissett marshes from the waters in Buzzards Bay. The subject property is fairly isolated and affected by ATB 2005-337
limited pedestrian and vehicular traffic. The camp has about 684 square feet of living space, coupled with an estimated 520 square feet of outdoor deck space. The dwelling contains three bedrooms, a living area with a small galley kitchen, and one bathroom. The camp is not insulated, and there is no heating system. The assessors valued the camp at $21,300 and the individual land components at $462,865 for upland, $10,082 for dune, and $490 for marsh. The appellant challenged only the value attributable to the upland portion of the land assessment. According to the appellant, the assessors assigned an unreasonably high condition factor to the upland portion of her parcel. She argued that, of all the homes on Drift Road, only her camp had repeatedly suffered significant hurricane damage. Her property, unlike that of her abutters, was not protected by a rip-rap, which utilizes rocks and concrete to create a barrier for shoreline protection. She compared her parcel s upland condition factor of 2.29 to other properties located on Surf Drive, which had also incurred substantial hurricane damage over the years but which had been assigned a condition factor of 1.00. Based upon this comparison, the appellant asserted that the 2.29 condition factor assigned to the upland portion of her parcel should be reduced to 1.0. The appellant testified, from an historical perspective, that her grandfather originally built a small camp on the ATB 2005-338
subject property in 1914, which she purchased from him in 1947. In 1938, the camp was completely destroyed by a hurricane, which also washed away the fourteen-foot high dune upon which the camp was originally built. After being rebuilt, the camp was again destroyed by a hurricane in 1954. In 1991, a hurricane caused rising waters and waves to rip off the now third-generation camp s deck and twist the remaining structure on its rear locust posts. Since its repair from the last hurricane, the camp has remained in essentially the same state that it was in as of the relevant assessment date. Over the years, the water in the Bay has risen to within fifteen feet of the camp s deck, while water from the marsh often washes over the access road onto the rear portion of the subject s upland area. In addition, the subject property is not serviced by town water, and, according to the appellant, its well water is brackish. The appellant and her daughter, Alexandra Thayer, who also testified on the appellant s behalf, contrasted the upland area associated with the subject property to the more favorable and protected sixteen-to-eighteen-foot-high upland areas associated with two other properties on Black Beach, which were assigned condition factors nearly comparable to the subject s. According to the appellant, these other two properties are not only set up higher than the subject property, but they also have ATB 2005-339
the added protection of multiple dune formations and mature vegetation. The appellant compared the subject property s upland area to the upland areas of properties located on Surf Drive, which had each been assigned a condition factor of 1.0. On this basis, the appellant calculated the value of the upland portion of her property at $202,166, utilizing a condition factor of 1.0. Accordingly, and generally accepting the values assigned by the assessors to the subject property s other components, she estimated the fair cash value of her property to be $254,111. Michael McGrath, a registered surveyor and professional engineer, whom the Board qualified as an expert witness, also testified for the appellant. Mr. McGrath first explained that the subject property is affected by various governmental restrictions such as zoning bylaws, Title V limitations, local and state wetlands protection ordinances and laws, state building codes, and regulations promulgated by the Board of Health. He also testified that the subject property is not only within the flood zone designated by the Federal Emergency Management Agency ( FEMA ), but is, in his opinion, at even greater risk of flooding than other properties within FEMA s designated flood zone for the area because of its lower elevation. ATB 2005-340
Mr. McGrath noted that if the subject property were again destroyed or seriously damaged, 1 it would have to be rebuilt on pilings elevating the first floor to fifteen feet above sea level. He noted further that it would be difficult to obtain permission from the regulatory authorities to enlarge the structure beyond its existing footprint. In addition, Mr. McGrath testified that Title V prohibits the reconstruction of septic systems in dunes or on barrier beaches. Consequently, if the subject property were rebuilt, Mr. McGrath testified that regulatory authorities would require the installation of a large elevated holding tank at an estimated cost of between $30,000 and $45,000, not including any legal and permitting expenses. Further, Mr. McGrath testified that a conveyance of the subject would trigger an inspection of the septic system. In his opinion, the subject s septic system would fail such an inspection, thus requiring the installation of a large elevated holding tank. Finally, Mr. McGrath corroborated the appellant s assertion that the subject property was equally susceptible to flooding as the properties on Surf Drive. James Jursac, an assistant assessor for Falmouth, testified in support of the assessment. He primarily relied on three recent sales of properties situated within FEMA s flood zone. 1 According to Mr. McGrath, seriously damaged is defined by the applicable town bylaws as damage that totals over fifty percent of the assessed value of the structure. ATB 2005-341
The properties are located in North Falmouth, Woods Hole, and East Falmouth. They are all ocean- or harbor-front properties with lots varying in size from 8,900 to 25,910 square feet and building footprints ranging from 626 to 1,484 square feet. 2 The North Falmouth and Woods Hole properties sold in 2001 for $777,000 and $900,000, respectively, and the East Falmouth property sold in 2000 for $832,250. Mr. Jursac did not believe that any adjustments were necessary to account for differences between the subject and his comparable properties locations, sites, or views. He also did not adjust for differences between the subject s assessment date of January 1, 2002 and the various sales dates. In his view, it was not necessary because the subject property is superior in those respects to the comparables and any adjustment would only serve to increase his estimated value attributable to the subject. Based on this research, Mr. Jursac testified that the relevant market suggested that an ocean-front property of the size of the appellant s, even with improvements susceptible to flooding, is nonetheless worth over $500,000 because the improvements can and will be rebuilt on pilings and, while a footprint may not be exceeded, a second level may be added to increase the dwelling s square footage. 2 The size and description of the comparable properties improvements are not relevant since they were razed by the purchasers, having been purchased solely for their water-front locations. ATB 2005-342
Mr. Jursac also testified that the properties located on Surf Drive were assigned a condition factor of 1.0 because they cannot be occupied at night, not because of flood risk. 3 He described the Surf Drive properties as daytime accommodations or beach cabanas with kitchens. He did not consider them comparable to the subject property. On the basis of all of the evidence presented, the Board found that, while the appellant raised valid points regarding her property s susceptibility to flooding and its exposure to natural disasters, she nonetheless failed to demonstrate that the subject property was overvalued for fiscal year 2003. The Board found that, even though the subject was located in a flood zone on a barrier beach, the upland portion of the property still retained significant value because, in the event of the camp s destruction, the dwelling could be rebuilt and even improved upon. While the regulatory requirements imposed certain restrictions, modifications, and additional expenses on rebuilding, they did not prevent reconstruction. If the camp were destroyed or seriously damaged, the Board found that it most likely could be rebuilt on pilings with an elevated septic system, which would meet all of the regulatory requirements. 3 Although Mr. Jursac did not cite any authority for the after-dark restriction, the appellant did not contest it. ATB 2005-343
In addition, the Board found that by rebuilding the subject s camp, a second level probably could be added thereby doubling the living space. Further, a prospective purchaser could similarly remodel the subject property. The Board determined that the upland portion of the ocean-front parcel, and the property as a whole, retained considerable value that was equal to or greater than the assessment. The Board also found that sales of ocean-front property within FEMA s flood zone in Falmouth amply demonstrated the subject property s rebuilding and remodeling potential and also revealed that the land itself had appreciable intrinsic value. In fact, it appeared from the evidence that the primary reason for purchasing certain ocean-front properties in Falmouth was to obtain the land, with little regard to the existing building or its presence in a flood zone, because the existing structure would likely be demolished for a later improvement, which complied with regulatory and flood zone requirements. The Board further found that the cabana-type properties located on Surf Drive were not comparable to the subject property. Accordingly, those properties did not provide the appellant with the support necessary to show that a similar condition factor of 1.0 should have been assigned to the upland portion of her parcel. The Surf Drive properties thus failed to support the proposition that the subject property was ATB 2005-344
overvalued. Moreover, the Board found that the assessors evidence regarding sales of ocean-front properties, and sales of properties in the vicinity of the subject property, all proved that the subject property was not overvalued for fiscal year 2003. For these reasons, the Board decided this appeal for the appellee notwithstanding the subject property s shortcomings. OPINION The assessors are required to assess real estate at its fair cash value. G.L. c. 59, 38. Fair cash value is defined as the price at which a willing seller and a willing buyer in a free and open market will agree if both of them are fully informed and under no compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956). The appellant has the burden of proving that the property has a lower value than that assessed. The burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) ( Schlaiker ) (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)). [T]he board is entitled to presume that the valuation made by the assessors [is] valid unless the taxpayers... prov[e] the contrary. General Electric Co. v. Assessors of ATB 2005-345
Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245)). In appeals before this Board, a taxpayer may present persuasive evidence of overvaluation either by exposing flaws or errors in the assessors method of valuation, or by introducing affirmative evidence of value which undermines the assessors valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)). In the present appeal, the appellant primarily focused on perceived errors in the assessors separate valuation of the upland portion of the land component associated with the subject property. A taxpayer, however, does not conclusively establish a right to abatement merely by showing that her land, or a portion of it, is overvalued. The tax on a parcel of land and the building thereon is one tax... although for statistical purposes they may be valued separately. Assessors of Brookline v. Prudential Insurance Co., 310 Mass. 300, 317 (1941). In abatement proceedings, the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether that single assessment is excessive. Massachusetts ATB 2005-346
General Hospital v. Belmont, 238 Mass. 396, 403 (1921). See also Buckley v. Assessors of Duxbury, 1990 Mass. ATB Adv. Sh. 110, 119 (Docket No. 166961, April 24, 1990); Jernegan v. Assessors of Duxbury, 1990 Mass. ATB Adv. Sh. 39, 48-49 (Docket No. 165883, February 16, 1990); Everhart v. Assessors of Dalton, 1985 Mass. ATB Adv. Sh. 49, 54 (Docket No. 132237, February 26, 1985). In the present appeal, the appellant challenged the value assigned by the assessors to the upland component of her parcel. She argued that the condition factor assigned by the assessors to the upland area should be reduced from 2.29 to 1.00, thereby reducing the value of the parcel and, concomitantly, the assessment on the property as a whole. The Board found that the assessment attributable to the upland portion of appellant s parcel was consistent with the value attributable to the upland portion of reasonably comparable parcels. The Board also found that the subject property's land and overall assessments were consistent with the land and overall values of other reasonably comparable properties. In addition, the Board found and ruled that the Surf Drive cabana-type properties were not comparable to the subject property. [S]ales of property usually furnish strong evidence of market value, provided they are arm s-length transactions and thus fairly represent what a buyer has been willing to pay for ATB 2005-347
the property to a willing seller. Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 682 (1982). Sales of comparable realty in the same geographic area and within a reasonable time of the assessment dates contain credible data and information for determining the value of the property at issue. McCabe v. Chelsea, 265 Mass. 494, 496 (1929). In the present appeal, the appropriateness of the subject property's overall assessment was confirmed by Mr. McGrath's comparable sales analysis. In valuing property for the purpose of assessing real estate taxes, assessors must take into account the effects of governmental regulations and conservation restrictions on the fair cash value of the property. See Parkinson v. Assessors of Medfield, 398 Mass. 112, 116 (1986); Boston Edison Co. v. Assessors of Watertown, 387 Mass. 298, 304 (1982); Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975). [R]estrictions on the use of property may reduce its value below that which would be appropriate in the absence of such restrictions. Mashpee Wampanoag Indian Council, Inc. v. Assessors of Mashpee, 379 Mass. 420, 422 (1980) (citing Lodge v. Swampscott, 216 Mass. 260, 263 (1913)). See also Reliable Electronic Finishing Co. v. Assessors of Carver, 410 Mass. 381, 382-383 (1991) ( the effects of proven environmental damage on the fair cash value of property [must be recognized] ). ATB 2005-348
While the appellant in the instant appeal introduced evidence of various governmentally imposed restrictions and regulations affecting the subject property, as well as its propensity toward flooding, the Board found that any effect caused by these restrictions and flooding on the fair cash value of the subject property did not diminish its value below the assessed value for the fiscal year at issue. The assessors comparable sales analysis sufficiently demonstrated that oceanfront properties in Falmouth retained significant value despite these restrictions, regulations, and propensity toward flooding. The Board found and ruled that the subject property was no different in this regard. "The [B]oard [is] not required to believe the testimony of any particular witness but it [can] accept such portions of the evidence as appear to have the more convincing weight. Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 72 (1941) ( Boston Consolidated Gas Co. ). The credibility of witnesses, the weight of evidence, and inferences to be drawn from the evidence are matters for the [B]oard. Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977). The market value of the property c[an] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment.... The [B]oard c[an] select the various elements of value as shown by ATB 2005-349
the record and from them form... its own independent judgment." Boston Consolidated Gas Co., 309 Mass. at 72 (citations omitted). See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 473 (1981); Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971). Based on the evidence presented in this appeal, the Board found and ruled that while the subject property was affected by many restrictions and regulations, as well as by flooding, it nonetheless was valued appropriately by the assessors for the fiscal year at issue. Therefore, after considering all of the evidence presented, the Board found and ruled that the appellant failed to meet her burden of proving that the subject property's overall assessment was excessive. The Board further found and ruled that the evidence presented by the assessors supported the subject property's overall assessment. ATB 2005-350
On this basis, the Board decided this appeal for the appellee. APPELLATE TAX BOARD By: Chair Commissioner Commissioner Commissioner Commissioner A true copy, Attest: Assistant Clerk of the Board ATB 2005-351